Correlation Between POSCO Holdings and Klckner Co
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and Klckner Co at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining POSCO Holdings and Klckner Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Klckner Co SE, you can compare the effects of market volatilities on POSCO Holdings and Klckner Co and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in POSCO Holdings with a short position of Klckner Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Klckner Co.
Diversification Opportunities for POSCO Holdings and Klckner Co
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POSCO and Klckner is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Klckner Co SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klckner Co SE and POSCO Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on POSCO Holdings are associated (or correlated) with Klckner Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klckner Co SE has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and Klckner Co go up and down completely randomly.
Pair Corralation between POSCO Holdings and Klckner Co
Assuming the 90 days horizon POSCO Holdings is expected to under-perform the Klckner Co. In addition to that, POSCO Holdings is 1.34 times more volatile than Klckner Co SE. It trades about -0.19 of its total potential returns per unit of risk. Klckner Co SE is currently generating about 0.03 per unit of volatility. If you would invest 474.00 in Klckner Co SE on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Klckner Co SE or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Klckner Co SE
Performance |
| Timeline |
| POSCO Holdings |
| Klckner Co SE |
POSCO Holdings and Klckner Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Klckner Co
The main advantage of trading using opposite POSCO Holdings and Klckner Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, Klckner Co can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Klckner Co will offset losses from the drop in Klckner Co's long position.| POSCO Holdings vs. ArcelorMittal SA | POSCO Holdings vs. Nippon Steel | POSCO Holdings vs. NIPPON STEEL SPADR | POSCO Holdings vs. Reliance Steel Aluminum |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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